India’s newest airline, Shankh Air, has received approval from the Civil Aviation Ministry to operate in the country, marking a significant milestone in its journey to launch operations. However, the airline will need clearance from the Directorate General of Civil Aviation (DGCA) before it can officially begin flights.
Shankh Air, set to be the first scheduled airline from Uttar Pradesh, will hub at Lucknow and Noida. According to the company’s website, the airline aims to connect major cities across India, offering both interstate and intrastate routes, focusing on areas with high demand and limited direct flight options.
“The company is further directed to comply with relevant provisions regulations of FDI, SEBl etc as well as other applicable rules & regulations in this regard,” the letter of approval from aviation ministry read.
The NOC granted to operate will be valid for a period of three years, it further stated. The airline’s launch could bring improved connectivity to regions that currently face limited air travel choices, enhancing regional mobility across India.
IndiGo currently holds over 60 per cent of India’s aviation market, making it the nation’s largest airline. With a current market share of 63 per cent, the airline is poised to capture even more passenger traffic, further consolidating its position in the country’s fast-growing aviation sector.
Meanwhile, Air India, the second-largest airline, is also expanding rapidly. The airline plans to absorb Vistara, currently co-owned by Tata Group and Singapore Airlines, by next year, pending antitrust clearance. In addition, Air India is acquiring AirAsia India and merging it with its low-cost subsidiary, Air India Express, further bolstering its fleet and market presence.
The ongoing consolidation in India’s aviation sector is seeing larger airlines grow bigger, while smaller players are retreating. Go Airlines India Ltd., which ceased operations in May due to financial difficulties and engine failures, is struggling to secure funding for revival efforts.
Similarly, no-frills carrier SpiceJet has reported continuous losses over the past five years and faces mounting financial challenges, including defaults on lease payments, leading to insolvency proceedings.
SpiceJet’s market share has been shrinking significantly, falling from 5.6 per cent in January 2023 to just 2.3 per cent by August. The airline, which once held a sizable 10.5 per cent market share in 2021, continues to face difficulties in raising funds to stay afloat.
According to Rajat Mahajan, a partner at Deloitte Consulting, India’s aviation market is shifting towards a few dominant players. “With this consolidation, a couple of airlines are projected to capture about 75 per cent of the market. This leaves a mere 25 per cent for other players, consequently leaving consumers with fewer choices and hence pricier tickets,” Mahajan noted.
New players like Akasa Air and Fly91 have also joined the race. Late Rakesh Jhunjhunwala-owned Akasa and Harsha Raghavan and Manoj Chacko-led Fly91 have been trying to make their way amid domination from big, established players.
The Tripura government is dissatisfied with aviation companies for not lowering airfares despite a substantial tax cut on aviation turbine fuel. Transport Minister Sushanta Chowdhury has asked the Union Civil Aviation Minister to impose an upper cap on airfares for Agartala-Kolkata and Agartala-Guwahati routes, especially ahead of Durga Puja, to alleviate financial strain on travelers.
As larger airlines like IndiGo and Air India continue to expand, smaller competitors are finding it increasingly difficult to survive.
India, now the third-largest domestic aviation market globally, recorded a robust 15 per cent year-on-year increase in air passenger traffic, handling 376 million passengers in FY24, according to a report by aviation advisory firm CAPA India. This growth highlights the resilience and expansion of the aviation sector despite challenges faced by several carriers in recent years.
In the current financial year, domestic air traffic is projected to rise by 6-8 per cent, reaching between 161 and 164 million passengers, while international traffic is expected to jump by 9-11 per cent to between 75 and 78 million passengers by March 2025.
India’s domestic aviation penetration stands at just 10 per cent, suggesting ample room for growth. To further boost connectivity, the government plans to extend its flagship Udega Desh ka Aam Nagrik (UDAAN) program for an additional 10 years, adding hundreds of new airports to the country’s network.
Despite this expansion, the Indian aviation market has seen several high-profile bankruptcies over the last decade, with Kingfisher Airlines, Jet Airways, and Go First all ceasing operations. These cases underscore the challenges airlines face, from high debt burdens and fluctuating fuel prices to aircraft leasing costs and capacity limitations.
CAPA India projects that Indian airlines will add 84 new aircraft by the end of March 2025, bringing the total number of planes in domestic service to 812. The industry has nearly 2,000 aircraft on order, expected to be delivered in phases over the coming years, indicating a strong commitment to future growth.
Indian airlines are poised to capture a larger share of international traffic, which is expected to reach 50 per cent by FY 2027-28, up from 43 per cent in the previous fiscal year, according to a report from credit ratings agency CRISIL. This improvement will be driven by the addition of new routes, increased aircraft deployment, and Indian carriers’ superior domestic connectivity compared to foreign airlines.
